When Sam Jarbou heard that the price of General Motors Corp. stock was on the rise after billionaire investor Kirk Kerkorian made an offer Wednesday to more than double his stake in the company, the 50-year-old gas station owner made a beeline for his broker's office in Troy and cashed out his 4,000 shares.
Jarbou, who a month ago bought GM stock at $27.50 per share, cleared a handsome $12,000 profit when he sold at $30.50. But he also believes the embattled automaker benefited from Kerkorian's move by getting a much-needed vote of confidence from the seasoned investor.
"It's good for GM," he said, "and it's good for me."
Not everyone with ties to the world's largest automaker shared Jarbou's optimism on Wednesday, as reports that Kerkorian was setting his sights on GM rippled through Metro Detroit and around the world.
Some former workers fear that Kerkorian is only out to make a buck and does not have the company's best interests at heart, while some investors struggled to believe Kerkorian's claim that his play for a bigger chunk of GM was only for investment purposes.
Yet, there was consensus on one thing: that Kerkorian's bid to acquire an additional almost 5 percent of GM -- up from his roughly 4 percent stake today -- seemed to signal the start of something bigger.
James Bergstrom, a GM retiree from Flint, watched with alarm as GM's U.S. market share slid to near an all-time low in recent months and the automaker posted a $1.1 billion loss in the first quarter.
"I don't know which way (Kerkorian) would go, but any change would be good," said Bergstrom, 61, standing in front of GM World Headquarters at the Renaissance Center in downtown Detroit. "This company needs help."
But some workers would rather see that assistance come from another source.
Tom Simpson, 58, a former hourly worker at GM's parts division in Pontiac, believes Kerkorian is taking advantage of GM's vulnerable position and has no intention of helping to turn the company around.
"It's kind of like a vulture that sees a weakened body on the ground and swoops down to eat it," said Simpson, who now lives in Clearwater, Fla.
GM retiree Jack Dickinson echoes that thought. "I don't believe this gentleman has the best interests of this company and its employees at heart," said Dickinson, who maintains
www.overthehillcarpeople.com, a Web site for GM employees and retirees.
For investors who hold a large interest in GM, however, Kerkorian's move to increase his stake brought a welcome boost in the company's stock price, which has been headed downward for months.
In trading on Wednesday, GM's stock rose 18 percent -- its biggest gain in nearly 50 years -- to close at $32.80 per share on the New York Stock Exchange.
"Clearly, we're happy investors today," said David Giroux, analyst with T Rowe Price, an investment firm in Baltimore, Md., that holds 1.3 million GM shares. But Giroux believes the stock is still undervalued and could be lifted higher as more eyes turn toward GM.
In the near term, Kerkorian's move could put pressure on the United Auto Workers union to make concessions on health care costs and other expenses to help GM become more competitive and better able to fend off takeover plays by outside investors, Giroux said. The UAW is likely to prefer dealing with a known entity like GM, rather than an unpredictable investor like Kerkorian, he said.
The UAW declined to comment on Kerkorian's bid to acquire a bigger stake in GM.
Other large GM investors seemed unfazed by news of Kerkorian's offer, viewing it more as a technical movement of the market than a symbolic shift in ownership at one of the country's largest companies.
"We're a long-term investor," said Sherry Reser, spokeswoman for the California State Teachers' Retirement System in Sacramento, one of the largest institutional investors in GM with about 1.8 million shares. "So we don't react to the day-to-day movements of the market."
Though Kerkorian's stake in GM is poised to increase, the deal may not have much impact on employees and dealers.
Brian Tellier, general sales manager at Jefferson Chevrolet in Detroit, believes much of the reaction to Kerkorian's action is exaggerated.
"Nine percent is still a long, long way from a controlling interest," he said.
And it is still unclear to many what Kerkorian will do with his stake in GM.
Jarbou, the investor who sold his GM shares on Wednesday, believes the interest from a seasoned investor like Kerkorian could only strengthen the ailing company's position. But he is confident the automaker will find its way out of trouble -- with or without Kerkorian.
"GM will be back, you watch," he said. "I never worry about GM. They always come back."
You can reach Brett Clanton at (313) 222-2612 or bclanton@detnews.com.
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